Long-time China investors are betting the nation is poised to recover its momentum even as tensions with the US have left it uninvestable in the eyes of many in the West.

Investors including Fang Fenglei, the chairman of private equity firm Hopu, and Fred Hu, the founder and CEO at Primavera Capital Group, both struck an optimistic tone on the country’s long-term growth at the Milken conference in Hong Kong on Tuesday despite challenges brought on by the real estate downturn and US geopolitical tensions.

Goodwin Gaw, the founder of Gaw Capital Partners, said China is at a pivot point for its restructuring of the real estate sector. He added that the reduced interest in China creates opportunities.

“So when the world thinks the second-largest economy is uninvestable, there will be opportunities,” Gaw also said at the conference. 

Investors have navigated challenging terrain over the past few years as China has cracked down on broad swaths of its private sector. At the same time, US sanctions have caused a rush of divestments in China and cuts to allocations in the world’s second-largest economy. Foreign businesses’ new direct investment into China slumped to a 30-year low in 2023, with top officials vowing to focus on luring overseas capital this year.

But the flip side is also true, according to Fang, who said Chinese investors have also grown “disillusioned” with the US. “For China, the most important thing is still to work on itself well,” he said.

While China struggled to gain momentum last year, the picture has been more upbeat at the start of this year. Exports have picked up and industrial production and investments have beaten expectations. Still, economists say more policy support is needed to reach the ambitious economic growth target of around 5% this year.

Despite the Biden administration’s “small yard, high fence” policy curbs against China in core technology and military sectors, Fang said that the country’s abundant talent, deep markets and capital mean it will still grow.

His words were echoed by Hu, who joined him on the same panel, arguing that China is now re-balancing its economy to become more consumer focused even though it will be painful in the short-term.

Hu said that whether Biden or Trump get a second presidential term, the US’s China policy will stay the same.

It’s really up to the Chinese themselves, their policies, consumers and entrepreneurs, he said. “If China gets that right, then the US will become less relevant.”

  - Bloomberg